That Gandalf is SuperImmortalMegaGandalf. He is just arguing that he is capable enough to not be threatened by one orc, no matter how big and bad (the wargs are a different story, as there are lots and lots of them).

Though Ainur has conceded that if this orc (Bolg) is portrayed as some sort of lesser Maiar spirit (a so-called Boldog), it could be acceptable for him to face Gandalf mano a mano.